What salary sacrifice actually does
Salary sacrifice into superannuation means agreeing with an employer, before the pay is earned, to redirect part of a salary into super instead of receiving it as cash. The redirected amount is taxed inside the super fund at 15% (the concessional contributions rate the ATO applies to employer and salary-sacrificed contributions alike), rather than at the employee’s marginal income tax rate, which is higher than 15% for almost every full-time wage in Australia once the tax-free threshold is used up. The gap between those two rates is the entire point of the arrangement: it’s not free money, it’s a lower tax bill on money that’s going into super either way.
The trade-off is real, though. Every dollar sacrificed is a dollar of take-home pay given up now, locked away until preservation age. This calculator shows both sides at once: how much smaller the pay packet gets, and how much larger the super contribution gets, so the decision is made on the actual numbers rather than a rule of thumb.
Salary sacrifice into super, or into a benefit like a car
This calculator models sacrificing into superannuation, because that’s the arrangement with the cleanest tax rule (the flat 15% rate above) and the one that suits the widest range of people. It isn’t the only kind. An employee can also sacrifice part of their salary into a fringe benefit instead, a car under a novated lease is the common one, along with things like extra super, a laptop used mainly for work, or airport lounge membership for someone who travels for the job. The tax mechanics are completely different: super sacrifice is taxed inside the fund at the concessional rate, while a fringe benefit runs through fringe benefits tax, a different regime with its own rates and reporting, and one the employer, not the employee, is technically liable for.
Mixing the two in one package is common, a bit of extra super plus a novated car lease, but they need to be worked out separately. Whatever’s sacrificed into super counts toward the concessional cap discussed below. What’s sacrificed into a fringe benefit doesn’t touch that cap at all. It runs on its own rules entirely.
The concessional contributions cap
There’s a limit. Employer super guarantee contributions and salary-sacrificed amounts are added together against one annual cap ($32,500 for FY2026–27), and contributions over that cap lose the tax concession: they’re taxed again at the employee’s marginal rate on top of the 15% already paid in the fund. Someone on a reasonable trade or trades-business wage, already receiving 12% super guarantee from their employer, can get closer to that cap than it first looks once a meaningful sacrifice is added on top, which is why this calculator checks the combined total, not just the amount being sacrificed. People with a total super balance under $500,000 may be able to carry forward unused cap room from the previous five years; that carry-forward isn’t modelled here and is worth checking directly with the ATO or a financial adviser if the cap is close.
High earners face an extra wrinkle this tool doesn’t calculate: once combined income and concessional contributions pass $250,000 in a year, an additional 15% Division 293 tax applies to the excess. If that applies, treat the figure above as a starting point, not the final answer.
Salary sacrifice can’t reduce the super guarantee owed
Before 2020 there was a genuine loophole here: an employer could count an employee’s own salary-sacrificed super toward its super guarantee obligation, effectively making the employee fund part of what the employer was supposed to pay. That’s closed. Under current ATO rules, an employer has to calculate super guarantee on what the employee’s ordinary time earnings would have been without the sacrifice, then pay the full 12% on that higher figure, with the sacrificed amount sitting on top rather than counting toward it. An employer still working out super guarantee on the post-sacrifice, reduced salary is underpaying, and it’s worth checking a payroll system actually applies this correctly rather than assuming it does.
Who this actually suits
The gap between someone’s marginal tax rate and the 15% contributions rate is what makes salary sacrifice worth doing, and that gap isn’t the same for everyone. Someone earning close to or under the tax-free threshold gets little or no benefit. Their marginal rate can already be at or below 15%, so sacrificing simply moves money into an account they can’t touch for decades in exchange for a small tax saving or none at all. It matters more for anyone paying the 30% or higher marginal rate, which is most full-time trades and business income above the mid-$40,000s. This tool also assumes a standard PAYG employee arrangement; a business owner drawing income through a company or trust structure is working with a different set of levers entirely (deductible employer contributions, the company tax rate, and Division 7A), and salary sacrifice in the employee sense doesn’t map cleanly onto that situation. That’s a conversation for an accountant, not this page.
Fringe benefits tax, and why the employer cares
When salary is sacrificed into a benefit rather than into super, the employer usually ends up with the fringe benefits tax bill, not the employee. That’s the main reason not every employer offers benefit-style packaging even where an employee would like it: it adds an FBT liability and a reporting obligation the business has to manage, on top of whatever it’s already doing for payroll and super. Some benefits are FBT-exempt or concessionally taxed (certain work tools, some remote-area benefits), which is part of why laptops and phones show up in packaging offers more often than, say, a holiday. The ATO’s guidance for employers sets out which benefits attract FBT and which don’t. A small business weighing up whether to offer packaging beyond super is really weighing up whether the FBT and admin overhead is worth it for a handful of staff, and for a lot of small trades employers, it isn’t.
Novated leases, in short
A novated lease is the most common way benefit-style packaging shows up for tradies and small business staff: the employee leases a car, the employer takes over the lease payments and deducts them from pre-tax and post-tax salary, and the arrangement novates back to the employee if they leave the job. It can lower the effective cost of running a car, but it’s genuinely complicated. Running costs, the residual value at the end of the lease, and how much the car is actually used all change the sums, and the FBT treatment depends on whether the lease meets the ATO’s bona fide lease conditions. This calculator doesn’t model novated leases at all. It’s a superannuation-only tool, and a car lease decision genuinely needs its own comparison, run by the leasing provider or an accountant against the actual vehicle and actual kilometres.
What sacrificed salary still counts for
Here’s the bit that catches people out. Sacrificing lowers taxable income, that’s the whole point, but plenty of other calculations add it straight back. Salary-sacrificed super shows up as a reportable employer super contribution, and reportable super contributions (along with reportable fringe benefits from any benefit-style packaging) get added back into income for things like HELP/HECS repayment income, family assistance testing and child support assessments. So sacrificing won’t shrink a compulsory HECS repayment the way it shrinks a tax bill, even though both are worked out from income. Anyone weighing up a bigger sacrifice specifically to reduce a HECS repayment should check that assumption before acting on it, because it doesn’t hold up.
Not financial advice, just the arithmetic
Whether salary sacrifice is the right call depends on things this calculator doesn’t know (age, other debt, whether the cash is needed sooner than retirement, and the rest of a person’s financial picture). What it does do honestly is the tax arithmetic: the actual dollar gap between taking the money now and taking it later, under this financial year’s rates. For anything beyond that, a licensed financial adviser or the ATO’s own guidance is the right next stop, not this page.
If the business itself is the thing that needs tidying up (quotes, invoices and admin scattered across tools that don’t talk to each other), that’s the kind of problem Delta Infotech’s business systems work is built for, and it’s worth a look at what that costs alongside any super decision.